TaxTMI 
TaxTMI 
2016 (4) TMI 337
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.... Officer/DRP has erred in holding that the interest income earned by the Appellant is taxable at the rate prescribed under the Act, instead of a lower/ beneficial rate prescribed in India-Cyprus Double Taxation Avoidance Agreement ('DTAA'). 2.1 The Ld. Assessing Officer/DRP has erred in holding that the Appellant has itself not claimed the benefit of the DTAA, merely on the ground of Appellant's inadvertence of not filling Schedule 'SI' (Special Income) of the Income-tax Return Form. 2.2 The Ld. Assessing Officer/ DRP has erred in denying the Appellant from claiming the benefits of DTAA, merely due to non-filing of a revised return and disregarding judicial precedents and CBDT Circular, casting an obligation upon the Revenue to not to take an advantage of Appellant's bonafide mistake or ignorance. 2.3 The Ld. Assessing Officer/DRP also erred in ignoring the fact that the Appellant has been consistently claiming the benefits of the beneficial provisions of DTAA, which have been accepted by the Revenue either in scrutiny assessments or under section 143(1) of the Act. 2.4 The Ld. AO, while framing the draft assessment order, has erred in disregardi....
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....ut the dispute is essentially on two issues, which we shall with hereinafter in seriatim. 3. Briefly put, the relevant facts are that the appellant assessee was incorporated in Cyprus and is a tax resident of Cyprus. It is engaged in the business of making investment in real estate development companies in India and is eligible to claim the benefit of India-Cyprus Double Taxation Avoidance Agreement ('DTAA'). For assessment year 2010-11, it filed a return of income declaring interest income earned from Compulsory Convertible Debentures (CCDs) of the investee companies in India engaged in the business of development of real estate. The said income was offered to tax @10% purportedly in line with the provisions of Article-11(2) of the India-Cyprus Double Taxation Avoidance Agreement (DTAA). The Assessing Officer, however, taxed the income on the normal rate of 43.23% on the ground that the assessee company did not fill up the 'Special Income'(SI) schedule in the return of income filed. In other words, the Assessing Officer did not allow the benefit of the lower rate of tax prescribed in the India-Cyprus Double Taxation Avoidance Agreement (DTAA). This is the first area of ....
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.... allowed since assessee has failed to file any revised return to show that the non-filling of the schedule of S.I in the return of income was an inadvertent mistake. 6. We have carefully considered the rival submissions. The material on record clearly establishes that the appellant is a tax resident of Cyprus, which is further supported by the 'Tax Residency Certificate', issued by the Competent Authority of Cyprus, copy of which has been placed on record. Consequently, it is eligible to claim the benefit of India-Cyprus Double Taxation Avoidance Agreement (DTAA) and such claim of the assessee has been accepted by the Assessing Officer in scrutiny assessment in the preceding assessment year of 2009-10 and also in the subsequent assessment years of 2011-12 and 201213 in the intimation made under section 143(1) of the Act. Even otherwise, we find that in the orders of the authorities below there is no contravention of assessee's claim for taxation @ 10% on merits. The fact that assessee did not fill-up Schedule-SI in the form of return of income has singularly prevailed with the lower authorities in denying the benefit of the concessional rate of tax prescribed in the India- Cypru....
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....e before Hon'ble Rajasthan High Court, the assessee's claim for exemption under section 10B of the Act was sought to be denied by the Revenue on the ground that while E-filing the return of income, the claim was wrongly mentioned as being under section 80IB of the Act, which was sought to be explained by the assessee as a mere typographical error. The Hon'ble High Court affirmed the stand of the Tribunal, whereby the claim of the assessee for exemption under section 10B of the Act was allowed considering that a mere typographical error in mentioning section 80IB of the Act in the return of income would not disentitle the assessee's claim for exemption under section 10B of the Act. 6.2 In our considered opinion, in the present case, having regard to the facts and evidence on record and in law, the claim of the assessee for taxation @ 10% following India-Cyprus Double Taxation Avoidance Agreement (DTAA) deserves to be allowed. We hold so. 6.3 In the result, so far as the first issue is concerned, assessee succeeds. 7. In so far as second issue is concerned, relevant facts are that assessee had invested Rs. 606.50 crores in the CCDs of seven real estate companies in India and....
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....t of the Hon'ble Bombay High Court in the case of Siemens Aktiengesellschaft (supra), wherein having regard to the DTAA between India & Federal Germany Republic, the assessment of royalty or fee for technical services was held to be taxable on receipt basis. In the case of National Organic Chemical Industries Ltd. (supra), the Tribunal was concerned with payment made to non-residents i.e. a Swiss company, for acquiring some material safety data sheets. It was held that since the payment was covered by the scope of Article 12(4) of the Double Taxation Avoidance Treaty with Switzerland, it was liable to be taxed on the basis of payment. Similarly, in the case of Johnson& Johnson (supra) in the context of the DTAA between India and USA, wherein also expression "paid" used in Article 12(1) was interpreted to mean that the royalty was to be taxed on "paid" basis and not on accrual basis. The aforesaid precedents support the understanding of the expression paid used in Article 11(1) of the India-Cyprus Double Taxation Avoidance Agreement (DTAA) to mean that the interest income in question is liable to be taxed on payment/receipt basis and not on accrual basis, as sought to be made out by....